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This Op-Ed was originally published in The Jakarta Post
by Abdul Somad*
Government representatives from 16 countries in the region met in Bali recently to continue negotiations for a new regional trade agreement, the Regional Comprehensive Economic Partnership (RCEP). If successful, the deal will create the world’s largest free trade area, covering more than half the world’s population. It includes China, India, all ASEAN countries as well as Australia, New Zealand, Japan and South Korea.
Trade agreements like the RCEP are designed to make it easier for foreign multinational corporations to invest and do business. In doing so, they put the rights of citizens and workers second to profits. Agreements usually include commitments to cut government regulations on corporations (like setting price limits, quality guarantees or staffing levels).
They also include investor protection that allows foreign multinational companies (but not local companies) to sue our government at international tribunals if the government applies any regulation or policy that the investor thinks has reduced their profit or might reduce their profit.
Jakartans won a great victory when the Supreme Court ordered that Jakarta’s water must be returned to the public. The court decided that the human right to water had been violated and that the companies had failed to guarantee an adequate supply of clean, potable water to the city’s residents. Despite delays and appeals, Jakarta Governor Anies Baswedan says he is planning to take back control of tap water. This is significant for the capital as we commemorate World Water Day on March 22.
The Jakarta Water Workers’ Union (SP PDAM) supports the steps taken by the governor to put the water back into public hands in the city. Private providers have failed to improve services to the city’s residents both from the technical and nontechnical sides. This has resulted in the rejection of the private companies by the city’s residents and various other parties. Furthermore, this is in accordance with both the 1945 Constitution (Article 33), which reads “land, water and natural resources contained therein are controlled by the State and are used for the greatest prosperity of the people”, as well as the United Nations Convention on the Right to Water.
Private providers have failed to improve services to the city’s residents.
But no matter what the Constitution says, what the Supreme Court determines, what the government decides, nor what the people demand, the companies holding the contracts can sue the government for trillions of rupiah.
Trade agreements often include an investor-state dispute settlement mechanism (ISDS), which allows foreign investors — and only them — to sue governments at secretive tribunals that are not bound by the constitution or the decisions of national courts.
Indonesia is not the only country to have privatized water and subsequently experienced price increases, poor quality water, no access in economically poorer communities and failed infrastructure. Argentina also followed the World Bank’s advice and sold off water to foreign companies. Later, a democratically elected government sought to set price limits on water and force companies to provide safe water for drinking and sanitation. They faced nine ISDS lawsuits.
One company, a subsidiary of Enron, successfully sued Argentina for US$165 million because the government refused to increase prices. Argentina was also sued by Suez, one of the original companies that has contracts for Jakarta water and by SAUR, another French water company. In the Saur case the tribunal said they recognized the government’s obligation to ensure the right to water was met, but that the human rights of citizens needs to be “counterbalanced” against investor rights and awarded the investor $40 million.
In Bulgaria, where the subsidiary of another French water company, Veolia, failed to provide affordable quality water services, citizens collected signatures to hold a referendum to evaluate the private contractor. The risk of facing a lawsuit and the price tag attached to it deterred the government of Bulgaria from even allowing the referendum to take place.
Indonesians have already paid trillions of rupiah to foreign companies who have sued the government using existing trade agreements. In one case, Indonesia had to pay cement giant Cemex Rp 4.7 trillion ($331 million). On top of that there were the costs of defending litigation — likely reaching billions of rupiah. Big mining companies sued Indonesia because of the 2014 mining law that tried to increase national ownership and as a response the government terminated 20 agreements. So why enter into an even larger agreement?
In addition to the risk of ISDS suits, trade agreements can reduce access to affordable medicines, stop the right to share seeds with your neighbors, limit government capacity to set prices and provide subsidies to the poorest, ban policies that preference locally produced Indonesian produce and prevent dumping of imports, increase corporatization and privatization of our public services and restrict the government’s ability to regulate in the public interest.
As residents await the restoration of public water in Jakarta, the government must not agree to a deal that will put peoples’ right to water further at risk. In this election year we need to ask whether candidates intend to govern for the people or the powerful. If the answer is “the people” they will not proceed with trade agreements that give corporates the power to trample over our human rights.
Abdul Somad is president of the Jakarta Water Workers’ Union (SP PDAM Jakarta).